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EBRD steps up financing for Serbia’s SMEs via local banks

By Olga Rosca

The European Bank for Reconstruction and Development (EBRD) has scaled up its financing for key banks in Serbia in a move to support small and medium-sized enterprises (SMEs) as they grapple with the impact of the coronavirus pandemic.

Loans for SMEs are available via Serbian subsidiaries of Banca Intesa, Erste Bank, Eurobank, ProCredit Bank and UniCredit Bank thanks to new EBRD financing worth €210 million.

Serbia’s SME sector is one of the pillars of the national economy, accounting for 66 per cent of the country’s employment. As a consequence of the Covid-19 outbreak many companies have experienced a decrease in turnover and profitability, leading to payment delays and an increased demand for liquidity.

The EBRD financing is addressing the liquidity needs of corporates and small businesses alike, helping to save jobs and keep the economy’s wheels turning. A part of the funds is available in dinar to help SMEs that sell their goods and services domestically in local currency mitigate currency risks.

Zsuzsanna Hargitai, EBRD Regional Director, Western Balkans and Head of Serbia, said: “At the EBRD we pride ourselves on our ability to respond to the private sector’s immediate needs in crises. Greater access to finance is a lifeline for many small businesses in Serbia as they face a drop in sales and cash-flow, and experience supply chain disruption.”

In addition to facilitating access to finance through the provision of loans, the EBRD is also supporting local small businesses with other products such as trade finance lines under its Trade Facilitation Programme.

As importers and exporters grapple with increasingly complex supply routes, there has been a rapid rise in demand for trade finance that is vital to keeping open the channels of trade. Responding to this rising demand, the EBRD has committed new funds worth €90 million to Addiko Bank and Eurobank in support of their trade activities.

The EBRD is also planning to ramp up support for women entrepreneurs making new financing available via Banca Intesa in the near future. The Bank has created a dedicated Women in Business programme which combines access to finance with technical assistance for entrepreneurs.

To help mitigate the economic impact of Covid-19, the EBRD expects to deliver between €750 million and €800 million of new financing to the Serbian economy in 2020 alone. This follows a sharp increase in financing to over €500 million in 2019 from €396 million in 2018.

Aleksandra Vukosavljevic, EBRD Associate Director in the Belgrade office and in charge of working with financial institutions, added: “The financing provided via Banca Intesa and Unicredit Bank will help businesses upgrade services and products to European Union standards to be more competitive at home and abroad. Under the two credit lines, SMEs that have successfully implemented investment projects are eligible to receive a 15 per cent cashback grant financed by EU.”

The EBRD is a leading institutional investor in Serbia, having invested more than €6 billion across 267 projects in the country to date.

It is now entirely focused on responding to the coronavirus crisis and supporting economic recovery across the 38 economies where it invests; between 2020 and 2021 the EBRD expects to provide financing worth €21 billion. 

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